Lisa Gibson

With so many merchant services providers catering to high-risk clients, it should be easier than ever to find a company that will allow you to process credit and debit transactions. But in reality, it’s not so simple. Services providers may not offer the type of transaction methods that your business needs, or they may feel your business is too insecure to trust. As a result, you may be unable to find the right high-risk merchant services provider, denying you the ability to process credit and debit purchases, and costing your business money.

 

If you’re still seeking a provider, the following may help you in your search.

Why Won’t Services Providers Work with High-Risk Clients?

Naturally, services providers are less willing to work with companies that are unlikely to cover their requested sales volume or avoid excessive chargebacks. In order to offer services to a client, providers must be sure that the business will be able to pay any negative balance on their account. If a company is unable to meet the sales volume outlined in their agreement, the provider loses money. Similarly, when a client’s customers constantly dispute their charges, to the point where the balance in the client’s merchant account cannot cover the amount debited, the services provider must shoulder the burden, at least until the client can raise the difference. Working with high-risk clients is therefore an uncertain prospect, and many are unwilling to take that chance.

Why Am I Considered High-Risk?

Companies can represent a high-risk for a number of reasons. As previously mentioned, a business that frequently experiences chargebacks can be labelled as high risk. Some enterprises don’t even need a history of chargebacks to be considered unstable. In these cases, the high possibility that the business will attract disputed charges makes them a risk. Often, this involves companies that sell products or services that will not be delivered until a future date. A company may also pose an excessive risk if it offers annual memberships or recurring payments, as consumers can file a chargeback for up 18 months after they buy the service.

 

A business that features a staggering amount of chargebacks may find itself on the Member Alert to Control High-Risk (MATCH) list. Credit associations maintain this list to track those who commit serious breaches of conduct, from fraud to money laundering to identity theft and more.

 

You may also be considered high risk if you or your company are unable to provide positive favourable financial or credit information to a services provider. When an organization cannot offer financial information during a processors’ application process, a guarantor can sometimes sign instead. However, if this person lacks a high personal credit score, it may lead the processor to declare the applicant a high risk. This can also happen if a company does not offer enough financial information, or if these documents do not indicate that the business is prosperous and sustainable.

 

But in some cases, your business may be considered unstable even if you have done nothing to warrant it. Often, providers consider those working in fields that have negative reputations to pose a higher risk, even if the company in question is highly profitable. These types of enterprises can include gun sellers, websites for dating or gambling, and more.

What Solutions Are Available?

If you cannot to find the right right high-risk merchant services provider for your business, you should keep researching new companies. Many providers are willing to accept high-risk clients and offer services that suit everything from e-commerce to point-of-service transactions and more. While high-risk merchants usually must pay a higher rate, there are benefits to these types of accounts, as they can handle foreign currencies, enable repeat billing, and let newer companies achieve higher sales volumes.

 

Merchant Services Survival Handbook: A How-to-Guide to Payment Processing

Lisa Gibson

Lisa is the Credit Manager of BNA Smart Payment Systems and has over 18 years of experience in diverse roles of credit and credit risk management. She graduated from the financial program at Boreal College and is an expert in personal loans and line of credit, mortgage underwriting, private label commercial credit cards, small business loans, and merchant account underwriting. Lisa is also an avid railfan and HO scale train modeler, and enjoys curling.
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